In a filing with Bursa Malaysia on Friday, the oil and gas operator said that under its instruction, the field’s concession owner CaspiOilGas LLP (COG) had conducted a formal open tender exercise for the development of the oilfield.
Under the joint investment agreement signed in March 2012, Sumatec is entitled to 100% of the profit for the first two million barrels while from the third year onwards, the profit will be split 50:50 between Sumatec and COG.
COG is a unit of Markmore Energy (Labuan) Ltd (MELL), which Sumatec is also in the process of acquiring from Tan Sri Halim Saad (via his 99.9%-owned Markmore Sdn Bhd) for US$205mil (RM890mil). Sumatec signed a heads of agreement on the proposed purchase in the middle of last year.
“With the consistent crude oil Brent price above USD50.00 in the first quarter of 2017, the company considers it an opportune time to ramp-up the oil production and take advantage on the higher oil price by embarking on a production enhancement programme which was shelved earlier when the oil price was low,” Sumatec said in its statement on Friday,
“The production enhancements programme via tender encompasses the improvement/repaired of existing wells that include rehabilitation and rejuvenation works, drilling of new wells for appraisal and production, construction of oilfield surface facilities and upgrading of the central processing facilities.”
For the third and fourth quarters of this year, the daily average oil production is expected to rise by 500-1,000 barrels per day while for the first and second quarters of 2018, the volume increment is estimated at 1,000-1,300 barrels per day.
Sumatec, which swung into a loss attributable to shareholders of RM62.02mil for the year ended Dec 31, 2016 (FY16), also announced on the same day that its external auditor, SJ Grant Thornton, had expressed a qualified opinion on its financial statements.
According to SJ Grant Thornton, there are material uncertainties which, if not realised, may affect the Sumatec group or the company’s ability to continue as a going concern.
It noted that the current trade receivable of the group, amounting to RM185.05mil as at Dec 31, 2016, was due from MELL, a company in which a controlling shareholder has control.
“Significant portion of this balance has been long overdue. In the absence of any documentary evidence and alternative procedures, we are unable to obtain sufficient appropriate audit evidence to ascertain the recoverability of (the) amount due from MELL as at Dec 31, 2016,” the auditor said.
The group and company were experiencing negative cashflows of RM50.15mil and RM46.02mil respectively on operating activities for FY16.
The auditor explained that the ability of the Sumatec group and company to continue as going concerns depended much on the timely and successful implementation of the proposed corporate exercises to obtain new source of funds to generate adequate cash flows for development and production activities in the Rakushechnoye field and to achieve profit and positive cash flows from its operating activities.
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